Petrol, diesel price hikes to restart from next week: Report
‘With state elections getting over next week, we expect daily fuel price hikes to restart across both gasoline and diesel,’ JP Morgan said in a report
New Delhi: Petrol and diesel price hikes are likely to resume after state elections get over next week, JP Morgan said.
“ We expect retail diesel and gasoline price hikes to restart from next week: With state elections getting over next week, we expect daily fuel price hikes to restart across both gasoline and diesel. Pump prices have been unchanged since November. We estimate that at spot Brent (~$105/bbl) and Diesel prices, the Oil Marketing Companies (OMCs) are losing Rs5.7/ltr v/s normalized margins of Rs2.5/ltr. We would caution investors that given the volatility in crude, diesel and forex, these numbers are dynamic and could change from day to day," JP Morgan said in a report.
International crude oil prices shot above USD 110 a barrel for the first time since mid-2014 on fears that oil and gas supplies from energy giant Russia could be disrupted, either by the conflict in Ukraine or retaliatory western sanctions.
The basket of crude oil India buys rose above USD 102 per barrel on March 1, the highest since August 2014, according to information from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry.
The seventh and final phase of polling for the Uttar Pradesh legislative assembly is on February 7 and the counting of votes slated for March 10.
The brokerage said for oil marketing companies to revert to normalised marketing margins, retail prices need to increase by ₹9 a litre or 10 per cent.
"We expect a combination of small excise duty cuts ( ₹1-3 per litre) and retail price hikes ( ₹5-8 a litre) to reflect the pass-through of USD 100 per barrel oil," it said.
Domestic fuel prices - which are directly linked to international oil prices as India imports 85 per cent of its oil needs - have not been revised for a record 118 days in a row.
Petrol costs ₹95.41 a litre in Delhi and diesel is priced at ₹86.67. This price is after accounting for the excise duty cut and a reduction in the VAT rate by the state government.
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